Alaska Joins 22 Other States in Settlement with Time Inc. Concerning Automatic Renewal Offers and Mail Solicitations
March 21, 2006
(Anchorage) - Attorney General David Márquez announced today that Alaska and 22 other states reached a settlement with Time Inc. addressing complaints regarding that company's subscription mail solicitations and automatic renewal practices. As part of this settlement Time Inc. will refund up to $4.3 million dollars to consumers and will pay $4.5 million dollars to the states for their costs and fees.
Traditional industry practice has been to offer limited-term subscriptions that are renewed at the customer's option at the end of the subscription term. The states began investigating complaints when Time Inc. broke away from this long-standing practice and initiated an automatic renewal method that requires the customer to cancel the subscription if they chose not to renew. This new practice was initiated without adequate notice by Time Inc. to its customers. The states also investigated complaints that Time Inc. mailed consumer solicitations that appeared to be invoices and lacked the conspicuous disclosures required by law.
"The combination of these two practices was misleading and, as a result, a number of consumers were unfairly charged for a product they did not want," said Márquez. "Preventing individuals or companies from engaging in unfair conduct is at the heart of Alaska's consumer protection laws."
Time Inc. denied the states' allegations but agreed to take the following steps:
- Provide clear and conspicuous disclosures to consumers concerning all of the material terms for automatic subscription renewals. For the next five years, consumers will have the opportunity to affirmatively indicate whether they want the automatic renewal option
- Send customers written reminders of the automatic renewal, their right to cancel the subscription and the procedure for cancellation, before the end of the subscription period
- Honor all request to cancel subscriptions as soon as reasonably possible
- Refund the subscription price if customers are charged for magazines they did not order
- Desist from mailing solicitations to customers that resemble bills, invoices or statements of accounts due, and
- Desist from submitting unpaid accounts of automatic renewal customers for third party collections
Alaska's share of the payment is $12,500. In addition, the total available restitution to 450 eligible Alaska consumers is $20,120.74. Time Inc. will send refund letters and claim forms approved by the states to customers explaining the settlement and providing instructions to apply for payments.
For additional information regarding the settlement please contact Assistant Attorney General Cathy Stone at 269-5200.
- Settlement - *LARGE PDF (3.26MB)
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